Fri, Feb 11, 2011 - Page 12 News List

Hon Hai posts weaker-than-expected sales for last month

By Lisa Wang  /  Staff Reporter

Hon Hai Precision Industry Co (鴻海精密), the world’s biggest electronics manufacturing service provider, yesterday posted weaker-than--expected sales for last month, which an analyst said reflected weak consumer demand for notebook computers and LCD televisions.

Sales jumped 36 percent to NT$186.23 billion (US$6.4 billion) last month, compared with NT$136.34 billion a year ago, marking the lowest level in eight months. On a monthly basis, the results represented a 24 percent decline from NT$244.68 billion in December.

Hon Hai manufactures a wide range of electronics for the world’s major brands including Apple Inc’s iPhone and iPad and LCD TVs for Sony.

Sales last month were 10 percent less than the NT$200 billion previously estimated by Vincent Chen (陳豊丰), an analyst with Yuanta Securities (元大證券).

“Disappointing sales of laptops, desktops and game consoles from Hon Hai’s customers could be the main reason,” Chen said. “I am not surprised as Hon Hai’s local peers such as Wistron Corp (緯創) also posted weak sales.”

Wistron Corp makes laptops for companies like Acer Inc (宏碁) and flat-panel TVs for Sony.

In addition, sales of Apple’s iPad could also slow down ahead of speculation about the launch of an upcoming new-generation of iPads, Chen said.

Hon Hai’s slow sales last month would also “reinforce the belief that demand will soften this quarter because it is a traditionally slow season.”

Chen gave Hon Hai a neutral rating over persistent concerns that rising labor costs in China and widening losses from its mobile phone arm, Foxconn International Holdings Ltd (富士康控股), would erode the company’s profit margin.

A target price of NT$124 implied just a 4 percent upside from the stock’s closing price of NT$119 yesterday.

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